A country produces at a new point within its production possibility curve when:

A.new technology is being applied to increase production.
B.there is an increase in capital investment by firms.
C.more is needed of one good and not the other good.
D.there is a fall in unemployment.

The answer on the book is D, Why? a fall in unemplyment should indictate that there is more labour force which means it can produce more, but the question said it produce at the point within the curve and this indicates that it didn't utilize its resources efficiently. So, why the D is correct?

The answer is D because the fall in unemployment means that there are less workers/ labour forces working in the country. So the country isn't utilizing its resources (in this case, the workers) to produce more goods. THAT'S WHY the country is operating WITHIN the production possibility curve. The country has the potential to operate ON the production possibility curve by using its workers but it isn't. Maybe the workers are not educated or the minimum wages for the workers set by the government is too much for companies so less workers are hired. You don't the reason but the question didn't ask for the reason.

Thanks for your reply, but why a fall in unemployment means less workers? when more people don't work there will be a higher rate of unemployment. A fall in unemployment should mean less workforce, is this right?